A decade later, acquaint in the Nasdaq collapse

SAN FRANCISCO – Ten years ago today, afore the dot-com balloon burst, the Nasdaq blended basis hit a almanac 5,132.52 credibility -- a aiguille that the technology-heavy bazaar shows no assurance of ascent afresh any time soon.

Analysts and adventure capitalists say the tech blast accomplished investors a acutely simple assignment that had been absent in the flurry of accessible banal offerings by Silicon Valley start-ups with not a atom of acquirement -- sales and profits, or at atomic the anticipation of profits, matter.

Today, the Nasdaq basis (.IXIC) rests at beneath than bisected its peak, and abounding of the better names from 2000 -- IBM (IBM.N), Hewlett-Packard (HPQ.N) and Microsoft (MSFT.O) -- are trading added like acceptable stocks, based on their fundamentals.

Finding the advance stocks, the companies of the future, has become trickier, investors say.

"Tech stocks were already beheld as altered and different, an industry that would abound rapidly and abutment abnormally aerial valuations," said Ken Allen, portfolio administrator at T. Rowe Price. "We abstruse a lot about the flaws in that logic. Tech stocks by and ample are appealing commensurable to added stocks."

Shares of baddest tech names accept thrived over the accomplished decade. These accommodate companies such as Apple Inc (AAPL.O), Amazon.com Inc (AMZN.O) and Research in Motion Ltd (RIM.TO), which accept articles that authentic their category.

Google Inc (GOOG.O) and Salesforce.com Inc (CRM.N), which went accessible in 2004, accept apparent their shares added than quadruple.

But abounding of technology's arch lights accept never appear abutting to regaining their accomplished glory. Shares of Cisco Systems Inc (CSCO.O), Beast Inc (YHOO.O) and Intel Corp (INTC.O) are bottomward added than 50 percent from that time.

Price-to-earnings multiples accept aeroembolism over the accomplished decade as tech advance has become added "rational," said Jeffrey Lin, an analyst at advance administrator TCW Group.

Microsoft's abaft price-to-earnings arrangement topped 70 times in aboriginal 2000, and today it is almost 16 times. IBM's P/E arrangement was added than 30 times in 2000, but now sits at 13.

"I feel acceptable about tech stocks this decade because we don't accept this big appraisal headwind like we did 10 years ago," Lin said. But he estimated the Nasdaq will booty addition seven to eight years afore it can beat the March 2000 peak.

VC SLUMP

In the backward 1990s, investors bought shares at boundless valuations and paid for advance they affected would materialize.

The aboriginal 2000 acceleration of the Nasdaq blended (.IXIC) was brief and, in retrospect, absurd. The basis surged from 3,000 to aloft 5,000 in four months.

The January 2000 Super Bowl football championship was apparently the clearest assurance of an approaching crash, with the advertisement beat by dot-com commercials. Firms from the now abominable pet accumulation banker pets.com to the long-forgotten online business aggregation LifeMinders.com angled over added than $2 actor anniversary to buy 30-second TV ads.

Barry Eggers, a architect of adventure basic close Lightspeed Adventure Partners -- an broker in companies such as Brocade Communications Systems (BRCD.O) and Ciena Corp (CIEN.O), and added afresh amusing gaming close Playdom, said he remembers accepting afraid as he saw the "froth" in the market.

Companies and their VC backers had been beneath amazing burden to go accessible quickly, he said.

"Those were the canicule aback it was a lot easier to go public, and if you didn't get accessible or get acquired for a ample number, it was a actual bootless outcome," Eggers said.

Today it takes almost seven to eight years for an antecedent advance in a aggregation to accomplish a return, he said, but in the tech boom, it took alone three to four years.

"What was active all that was the advance opportunity." Now he said, "We've abstruse to be added patient."

Venture basic firms were hit adamantine aback the balloon burst, and added afresh aback the banking crisis and recession struck. In 2009, VC fundraising fell 47 percent to $15.2 billion, the everyman akin aback 2003, according to abstracts from Thomson Reuters and the National Adventure Basic Association.

PATIENCE

Tech investors as a accomplished accept abstruse to be added accommodating as industry advance ante normalized. But divining the latest hot trend -- whether it be amusing networks, amusing gaming or adaptable Internet -- is added arduous than ever.

"Gone are the canicule of 30 to 40 percent projected CAGRs (compound anniversary advance rates)," said Broadpoint Amtech analyst Brian Marshall.

He recommends that investors acquisition "idiosyncratic, civil advance stories," such as Apple, VMware (VMW.N) and NetApp (NTAP.O), as new technologies like smartphones and virtualization agitate earlier ones like PCs and servers.

"You appetite to comedy the capacity that accept the best able-bodied outlooks, and again you analyze the leaders that accept the best befalling to grow," he said.

Marshall said the Nasdaq in 2009 and 2010 will mirror that of 2003 to 2004 aback the bazaar emerged from the dot-com crash, and thinks money will anon arch for advance stocks over value.

He said the Nasdaq could accomplish it all the way aback to the March 2000 heights in bristles to 10 years.

"I hope," he added.

(Reporting by Gabriel Madway, alteration by Tiffany Wu and Robert MacMillan)

 

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